David--
It is difficult to to estimate your own potential revenue by comparing it as a percentage of overall revenue. There are too many variables involved, the biggest being the size of the space, the market demand, the quality of the space, and its accessibility before and after hours.
One history museum I know that is located in the heart of an affluent neighborhood has a dedicated 15,000 square foot event space with a spectacular view of a park and a separate entrance off the main lobby. It is rented several times a week for lunches, dinners, and weddings and generates a substantial portion of the museum's earned revenue.
Another art museum uses their beautiful 3,000 square foot lobby as an event space. This restricts it to after hours use with setup beginning after 5 and is hard on the finishes. They debate whether the revenue is worth the effort.
I suspect you are thinking somewhere in between these two extremes and your results will depend on the specifics of your space and your community. I do this kind of ballpark estimating at the beginning of some of our projects. I will do a low and high estimate of the number of events and the potential net revenue from each--low and high figures for XX events at $XX net revenue. You can get in the right ballpark by checking out the rate sheets for other venues in your area and by talking to local caterers. Be sure to figure in additional maintenance costs. For more detailed projections there are a number of consultants who specialize in museum food service and events. It will be worth talking to one of them if you move forward.
I don't know how far along you are in your design process, but be sure to think through how access to the event space works, for both attendees and caterers. Far too many museums design these spaces as afterthoughts, and servicing them becomes a real challenge.
Good luck,
Guy
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Guy Hermann
Principal
Museum Insights
Original Message:
Sent: 07-27-2015 12:20 PM
From: David Beard
Subject: Facility Rentals: Percentage of Your Revenue
Our museum may be going through a major expansion project in the next few years. Besides the need for more exhibit space and upgraded HVAC systems, the opportunity exists to create a top-shelf events rental space like nothing else in our area. Since the construction project just to expand our exhibit spaces requires a two story wing, the conventional wisdom seems to be to take advantage of this and add the additional third level that would be dedicated to events rentals - a space we currently do not have other than galleries. The thinking being that it is less expensive to build in one phase than to try another capital campaign in a few years. Best to fill your bucket on one trip to the well, lest it go dry later.
Admittedly, this adds a significant cost to construction, but it is the one component of the project sure to increase revenue, whereas expanded exhibition space might give us a bump in admissions. As I present all of this information to my Board, it would be useful to know what percentage of their annual revenue other museums with dedicated events rental spaces earn. Even if you typically utilize your galleries for this purpose, your input would be appreciated as well.
Thanks in advance for your help.
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David Beard
Director
Museum of the Gulf Coast
Port Arthur TX
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